SUMMARY OF DOCTRINES

SUPREME COURT DECISIONS

GENERAL PRINCIPLES

POWER OF TAXATION
Coco-levy funds are in the nature of taxes

Pambansang Koalisyon Coco-levy funds are not only affected with public interest; they are, in
ng mga Samahang fact, prima facie public funds. They were raised with the use of the
Magsasaka at police and taxing powers of the State for the benefit of the coconut
Manggagawa sa Niyugan industry and its farmers in general.
(PKSMMN), et. al. v.
Executive Secretary, et.
al.
G.R. Nos. 147036-37
April 10, 2012

DIFFERENCE OF TAX FROM OTHER IMPOSITIONS

Determining factor is the purpose of the implemented measure

Angeles University In distinguishing tax and regulation as a form of police power, the
Foundation v. City of determining factor is the purpose of the implemented measure. If the
Angeles, et. al purpose is primarily to raise revenue, then it will be deemed a tax even
G.R. No. 189999 though the measure results in some form of regulation. On the other
June 27, 2012 hand, if the purpose is primarily to regulate, then it is deemed a
regulation and an exercise of the police power of the state, even though
incidentally, revenue is generated.

INCOME TAXES

TAX EXEMPTION OF CHARITABLE INSTITUTION

A non-stock, non-profit charitable institution must also operated exclusively for charitable or
social purposes to be exempt

Commissioner of Internal The effect of Sec. 27(B) of the NIRC is to subject the taxable income or
Revenue v. St. Luke’s income derived from activities for profit of proprietary non-profit
Medical Center, Inc. educational institutions and hospitals to the preferential rate of 10%
G.R. Nos. 195909 & instead of the ordinary 30% corporate rate.
195960
September 26, 2012

VALUE-ADDED TAXES

ZERO-RATED SALES
The rule of strict interpretation against the taxpayer-claimant applies on a claim for refund or
tax credit

Western Mindanao The NIRC mandates that a creditable input tax be evidenced by a VAT
Power Corporation v. invoice or official receipt that complies with the requirements of
Commissioner of Internal Revenue Regulations (RR) No. 7-95. Sec. 4.108-1 thereof particularly
Revenue requires that the term “zero rated sale” be stated prominently on the

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G.R. No. 181136 invoice or receipt. RR No. 7-95 is not an undue expansion of the law as
June 13, 2012 it proceeds from the rule-making authority granted by the NIRC to the
Secretary of Finance.

ZERO-RATED SALES
Imprinting of the word “zero-rated” on the invoices or receipts is required

Eastern The absence of the word “zero-rated” on the invoices and receipts of a
Telecommunications taxpayer will result in the denial of the claim for tax refund. The Court
Philippines, Inc. v. ruled that the appearance of the word "zero-rated" on the face of
Commissioner of Internal invoices covering zero-rated sales prevents buyers from falsely claiming
Revenue input VAT from their purchases when no VAT was actually paid. Further,
G.R. No. 168856 the printing of the word “zero-rated” on the invoice helps segregate
August 29, 2012 sales that are subject to 10% (now 12%) VAT from those sales that are
zero-rated.

ZERO-RATED SALES
The recipient of services must be doing business outside the Philippines

Accenture, Inc. v. To come within the purview of Sec. 108 (B) (2) of the NIRC on
Commissioner of Internal transactions subject to zero percent rate, it is not enough that the
Revenue recipient of the service be proven to be a foreign corporation; rather it
G.R. No. 190102 must be specifically proven to be a non-resident foreign corporation.
July 11, 2012

TRANSITIONAL INPUT TAX

Prior payment of taxes not necessary for availment

Fort Bonifacio There is nothing in Sec. 105 of the NIRC which indicates that prior
Development payment of taxes is necessary for the availment of the transitional input
Corporation v. tax credit. All that is required is for the taxpayer to file a beginning
Commissioner of Internal inventory with the BIR. The transitional input tax credit operates to
Revenue, et. al. benefit newly VAT-registered persons, whether or not they previously
G.R. No. 173425 paid taxes in the acquisition of their beginning inventory of goods,
September 4, 2012 materials, and supplies.

NIRC REMEDIES

REMEDY IN CASE OF INACTION OF THE CIR

The two options are mutually exclusive

Lascona Land Co., Inc. v.
Commissioner of Internal
Revenue
G.R. No. 171251
March 5, 2012
In case of the inaction of the CIR on the protested assessment, while
the taxpayer has two options, either: (1) file a petition for review with the
CTA within 30 days after the expiration of the 180-day period; or (2)
await the final decision of the Commissioner on the disputed
assessment and appeal such final decision to the CTA within 30 days
after the receipt of a copy of such decision, these options are mutually
exclusive and resort to one bars the application of the other.

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 SUMMARY OF DOCTRINES

TAX AMNESTY
Withholding agents on their withholding tax liabilities are disqualified

Asia International Under Sec. 8 (a) of the Republic Act (RA) No. 9480, withholding agents
Auctioneers, Inc. v. with respect to their withholding tax liabilities shall be disqualified to
Commissioner of Internal avail of the tax amnesty. RA 9480 does not exclude from its coverage
Revenue taxpayers operating within special economic zones.
G.R. No. 179115
September 26, 2012

CARRY-OVER OF EXCESS PAYMENT OR REFUND

The option is irrevocable for the taxable period it was exercised

United International It is clear from the last sentence of Sec. 76 of the NIRC that once a
Pictures AB v. corporation exercises the option to carry-over, such option is irrevocable
Commissioner of Internal "for that taxable period." Having chosen to carry-over the excess
Revenue quarterly income tax, the corporation cannot thereafter choose to apply
G.R. No. 168331 for a cash refund or for the issuance of a tax credit certificate for the
October 11, 2012 amount representing such overpayment.

CARRY-OVER OF EXCESS PAYMENT OR REFUND

The person entitled is the statutory taxpayer

Diageo Philippines,
Inc. v. Commissioner of
Internal Revenue
G.R. No. 183553
November 12, 2012
Pursuant to Sec. 204(C) of the NIRC, the person entitled to claim a tax
refund is the statutory taxpayer or the person liable for or subject to tax.
Accordingly, when the excise taxes paid by the supplier were passed on
to Diageo, what was shifted is not the tax per se but an additional cost
of the goods sold. Thus, the supplier remains the statutory taxpayer
even if Diageo, the purchaser, actually shoulders the burden of tax. The
statutory taxpayer is the proper party to claim refund of indirect taxes.

LOCAL TAXATION

LOCAL FRANCHISE TAX

Situs of taxation is the place where the privilege is exercised

City of Iriga v. Camarines
Sur III Electric
Cooperative, Inc.
G.R. No. 192945
September 5, 2012
A franchise tax is “a tax on the privilege of transacting business in the
state and exercising corporate franchises granted by the state.” Being in
the nature of an excise tax, the situs of taxation is the place where the
privilege is exercised.

REAL PROPERTY TAX

TAX EXEMPTION
Real properties must be actually, directly and exclusively used for educational or charitable
purposes

Angeles University "Exclusive" is defined as possessed and enjoyed to the exclusion of

Foundation v. City of others; debarred from participation or enjoyment; and "exclusively" is
Angeles et al. defined, "in a manner to exclude; as enjoying a privilege exclusively." If
G.R. No. 189999 real property is used for one or more commercial purposes, it is not

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June 27, 2012 exclusively used for the exempted purposes but is subject to taxation.
The words "dominant use" or "principal use" cannot be substituted for
the words "used exclusively" without doing violence to the Constitutions
and the law. Solely is synonymous with exclusively. It is not the use of
the income from the real property that is determinative of whether the
property is used for tax-exempt purposes.

COURT OF TAX APPEALS

DECISIONS OF RTCs IN LOCAL TAX CASES

CTA has jurisdiction to review by appeal

City of Iriga v. Camarines Republic Act (RA) No. 9282, which took effect on April 23, 2004,
Sur III Electric expanded the jurisdiction of the Court of Tax Appeals (CTA) to include
Cooperative, Inc. the power to review by appeal decisions, orders or resolutions of the
G.R. No. 192945 Regional Trial Courts in local tax cases originally decided or resolved by
September 5, 2012 them in the exercise of their original or appellate jurisdiction.

APPEAL FROM RTC TO CTA

The 30-day period is extendible

SM Land, Inc. (Formerly Under Sec. 1, Rule 42 of the Revised Rules of Civil Procedure, the 30-
Shoemart, Inc.) and day original period for filing a Petition for Review with the CTA under
Watsons Personal Care Sec. 11 of Republic Act (RA) No. 9282, as implemented by Sec. 3 (a),
Stores, Phils., Inc. v. City Rule 8 of the Revised Rules of the CTA, may be extended for a period
of Manila, Liberty Toledo of 15 days. No further extension shall be allowed thereafter, except only
in her official capacity as for the most compelling reasons, in which case the extended period
the City Treasurer of shall not exceed 15 days.
Manila and Joseph
Santigao, in his official
capacity as the Chief of
License Division of the
City of Manila
G.R. No. 19715
October 22, 2012

TAXPAYER’S SUIT
Illegal use of public money is necessary

Dela Llana v. The A taxpayer is deemed to have the standing to raise a constitutional
Chairperson, issue when it is established that public funds from taxation have been
Commission on Audit disbursed in alleged contravention of the law or the Constitution.
and The National
Treasurer
G.R. No. 180989
February 7, 2012

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 SUMMARY OF DOCTRINES

COURT OF TAX APPEALS DECISIONS

DONOR’S TAX

VALID DONATION
Animus donandi is indicative of a transaction subject to donor’s tax

Evono v. Department of In order to determine the tax liability in any transaction, not only the
Finance legal documents will be considered, but also some other external factors
CTA Case No. 705 surrounding the transaction, such as the capacity of the buyer in cases
June 4, 2012 of transfer of properties. There is a clear animus donandi, as evidenced
by Maribel’s request to include the names of her minor children in the
CARs and certificates of title of the properties.

VALUE-ADDED TAX

TRANSACTIONS SUBJECT TO VAT

An isolated transaction does not come within the meaning of “in the ordinary course of trade
or business”

Ongtengco v. In order for a person to be liable to VAT, he or she must sell, barter,
Commissioner of Internal exchange, or lease goods or properties, render service, or import
Revenue goods, in the ordinary course of business or trade. An act of lending
CTA Case No. 8190 money to a corporation cannot be considered as an act of lending in the
December 12, 2012 course of his trade or business, but merely an isolated transaction in
order to help the company in its provincial expansion programs.

NIRC REMEDIES

REMEDY IN CASE OF INACTION OF THE CIR

Judicial claim may be filed only upon the expiration of the 180-day period under Sec. 112 of the
NIRC

Panay Power The concerned taxpayer must file his judicial claim to the CTA within the
Corporation v. said 30-day period, which comes only upon the expiration of the 120-
Commissioner of Internal day period under Sec. 112 of the NIRC. Otherwise, the Court in Division
Revenue will not acquire jurisdiction over the subject matter or nature of the
CTA Case No. 7402 (En action.
Banc No. 709)
May 17, 2012

REMEDY IN CASE OF INACTION OF THE CIR

The 2-year period refers to administrative claim and not to judicial claim

Sumisetsu Philippines, The 2-year period provided for in Sec. 112 of the NIRC refers only to the
Inc. v. Commissioner of administrative claim and not to judicial claim.
Internal Revenue
CTA Case No. 7925
December 18, 2012

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OFFENSES AND PENALTIES

Deficiency interest and delinquency interest may be imposed simultaneously

Takenaka Corporation Deficiency interest is imposed for the shortage of taxes paid, while
Philippine Branch v. delinquency interest is imposed for the delay in payment of taxes.
Commissioner of Internal Having different nature for their existence, it cannot be assailed that
Revenue there is double imposition of interests as the law itself allows the
CTA Case No. EB No. 745 simultaneous imposition of these two kinds of interests.
September 4, 2012

EXCESS TAX CREDIT

The option to carry-over excess tax credit shall be irrevocable for the particular taxable period
it was exercised

Stablewood Philippines, If the option to carry over the excess credit is exercised, it shall be
Inc. v. Commissioner of irrevocable for that particular taxable period, and no application for a tax
Internal Revenue refund or issuance of a tax credit certificate shall then be allowed.
CTA Case No. 7704
October 8, 2012